Construction has been in dire straits for a year and that also affects the success formula of the turnkey house. “Our sales have fallen and we do not expect a major revival,” says Ewout Vanden Bussche van Huysman, an expert in the formula for fifty years.
Barbara DebusschereJanuary 10, 2024, 5:30 PM
The turnkey approach has been a great success for decades. Is that story coming to an end?
“Not that. It remains the case that you save time and money compared to a classic construction project. But just like the entire construction sector, we also feel that sales are becoming a lot more difficult. We usually sell about 120 homes per year. Last year there were 86. It should be noted that sales in 2021 were great, with 156 homes sold. That is why and because we have been doing this for fifty years and therefore have a lot of expertise, we can absorb this blow.”
You don’t have to cut staff or contracts with subcontractors?
“We have slimmed down somewhat, especially because we do not see this situation improving immediately in the next three years. We are aiming for almost a hundred homes in the coming years. Our gut feeling is that this could turn out even better, because interest rates on mortgage loans are now falling again.”
Is this formula extra vulnerable because you build a series of homes instead of one at a time?
“The problem in our sector is indeed that if we have a project of ten homes, we build all ten, even if only three have been sold. Building so many houses at once is more efficient, especially in terms of costs – but in this scenario you end up with seven unsold houses in stock. When credit is cheap, it doesn’t hurt us much. But today they have also become more expensive. We therefore have to absorb the higher financing costs of a stock of homes that remain unsold for longer. That cuts into our margins.”
Will you be building fewer houses at once from now on?
“That’s not easy: permit applications are already underway for around 660 houses. That process takes a long time. The approach with multiple houses at once also remains efficient. But while we used to start construction immediately as soon as a project was approved, we now proceed more cautiously. We only start realizing a project of, for example, four houses when two have already been sold. We want to reduce our stock of approximately seventy homes to about forty.”
What are the main causes of this malaise?
“In short, the prices of new construction have risen too quickly in too short a time. I estimate that the construction costs of a new-build home have increased by 70 to 100,000 euros in two years. That is an abnormal amount. It takes time for buyers to catch up. Important causes are the increased prices of materials and labor costs and the land that has become scarcer and therefore more expensive. In addition, the loans became more expensive due to the increased interest rates and a number of years ago the conditions for borrowing also changed. Today you have to contribute much more of your own resources when you take out a mortgage loan than a few years ago.”
Do you also feel the impact of the construction shift, which stipulates that no additional open space may be created in Flanders by 2040?
“Yes. It now takes much longer than before to obtain a permit for a project, because cities and municipalities want to preserve as much open space as possible. Construction projects are therefore regularly at odds with the conditions that cities set, such as less loss of open space. As a result, these projects sometimes cannot go ahead.”
Some suggest that the new single-family home on a subdivision is becoming less attractive, partly because families are getting smaller.
“I can only conclude that the number of people coming to our site is hardly decreasing. In 2022 we had 236,000 visitors, last year 227,000. That small difference tells me that this housing model still remains a dream in the minds of many people.”
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2024-01-10 16:30:34
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